Scottish Court of Session Decisions

The pursuer and the defender were married on 31 August 1957. They separated in 1984 and the pursuer raised an action of divorce. In that action decree of divorce was pronounced on 20 July 1989 and an award of a periodical allowance of £110 per week, payable until her re-marriage or death, was made in the pursuer's favour. The defender has now presented a Minute seeking variation of the award of periodical allowance to nil.

Before turning to the evidence which was led in support of, and in opposition to, the defender's application, it is appropriate to take note of the statutory context in which the application is made. The action of divorce at the pursuer's instance was raised in 1984, that is to say before the commencement of the Family Law (Scotland) Act 1985 ("the 1985 Act"). It follows that the present application is regulated by section 5 of the Divorce (Scotland) Act 1976 ("the 1976 Act"), and not by the more structured provisions of the 1985 Act. That is the effect of section 28(3) of the 1985 Act, which provides that:

1. to make an order for payment of periodical allowance under subsection (2) thereof; and
2. to vary such an order under subsection (4) thereof,

In Wilson v Wilson 1987 SLT 721 it was confirmed that the effect of section 28(3) was that:

and:

In Smith v Smith 1988 SLT 840 Lord Justice Clerk Ross, after referring to Wilson, said:

but added:

I would add that, in my opinion, the restrictions placed on making an order for payment of a periodical allowance by section 13(2) of the 1985 Act have no application in relation to the variation of an order made under the 1976 Act. In the present case Mr McKenzie, who appeared for the defender, sought to argue that the effect of the inclusion of the additional powers in section 28(3) was to suggest that on an application for variation of an award of periodical allowance made under the 1976 Act the court would be likely to limit any continuing award to a period of not more than three years. He sought to support that submission by references to passages in the Scottish Law Commission Report No. 67, "Aliment and Financial Provision" (paragraphs 3.12, 3.44, 3.107 and 3.121), but it does not seem to me that those passages, which are principally concerned with discussion of the rationale for the recommendations which were given effect by the 1985 Act, yield the inference which counsel sought to draw from them. In my opinion to introduce into cases of variation of awards of periodical allowance made under the 1976 Act a presumption against continuation of periodical allowance for more than three years would be unfair and contrary both to the terms of section 28(3) and to authority. It would be unfair, because it would be imposing an isolated aspect of the new regime on cases in which financial provision had originally been assessed under the old regime (c.f. Wilson, at 723L-724A). It would be contrary to section 28(3) and authority (Wilson and Smith), because it would be applying the principle set out in section 9(1)(d) of the 1985 Act to a 1976 Act case. In my opinion, the present application is regulated by section 28(3)(b) of the 1985 Act, and thus by section 5 of the 1976 Act with the sole modification that it is competent for any variation to limit the period for which a periodical allowance is to be paid. The relevant parts of section 5 are subsection (4) which provided that an order made under section 5 relating to the payment of a periodical allowance might, on the application of either party on a change of circumstances, be varied or recalled by a further order; and subsection (2) which provided that the court, in making an award of financial provision, had a broad discretion to make "such order, if any, as it thinks fit, having regard to the respective means of the parties ... and to all the circumstances of the case". I take the view that, in dealing with this application for variation, I continue to exercise the broad discretion conferred by section 5(2). I have, by virtue of section 28(3)(b) power to vary the original award of periodical allowance by setting a limit to the period for which it will be paid, but I would do that only if I thought it appropriate having regard to the means of the parties and the whole circumstances of the case.

The first question which requires to be considered, therefore, is whether there has been a change of circumstances. It was not disputed that there has. The defender remarried in 1990. At the time of the divorce he was on the staff of the Edinburgh College of Art, and earned a salary of just under £22,000 per annum. He retired from the College on 23 December 1997, by which time he was Assistant Director of the School of Architecture, earning about £34,000 per annum. His pension is of the order of £14,500 per annum. The pursuer is now in receipt of a state pension and a National Health Service pension. She was in receipt of neither of those pensions at the time of the divorce. Without examination of matters in any greater detail for this purpose, it is in my view clear from these main points alone that there have been changes of circumstances which open the way, in terms of section 5(4), to variation of the order made in 1989.

Since it must be assumed that when the original award was made regard was had to the respective means of the parties and the whole circumstances of the case, it is appropriate to note the other arrangements into which the parties entered to adjust their financial affairs with a view to divorce. They entered into a Minute of Agreement dated 9 September 1987 and 25 July 1988 (No. 49/2 of process), the main provisions of which may be summarised as follows:

1. the defender agreed to aliment the pursuer at the rate of £110 gross per week payable net of tax weekly in advance;
2. the jointly owned former matrimonial home at 12 Ramsay Garden, Edinburgh, was sold and the pursuer received one half of the free proceeds of sale [the amount of which half share was identified in the pursuer's evidence as £55,000] plus £10,000, while the defender received one half share less £10,000; the pursuer's extra £10,000 was consigned on joint deposit to await the granting of decree of divorce;
3. the defender agreed to pay the pursuer a further £3000 on the grant of decree of divorce;
4. the contents of the house were divided by mutual agreement;
5. the defender retained a single life policy with Standard Life Insurance;
6. certain building society accounts were shared equally;
7. the balance at credit of a Clydesdale Bank deposit account was shared equally, and the parties agreed each to be liable for one half of the overdraft (if any) on a Royal Bank of Scotland account;
8. jointly held shareholdings were divided equally; and
9. each party discharged all claims for a capital sum competent on the dissolution of the marriage.

At the date of divorce the defender's principal source of income was his salary from the Edinburgh College of Art, but he also had a small amount of remuneration in respect of his directorship of a company, John Simpson Jnr. (Glasgow) Limited, and some investment income. His income tax return for the year to 5 April 1989 (No. 49/1 of process pages 3-5) discloses:

His assessment of schedule E tax for 1989-90 (No. 49/1 of process, page 1) discloses:

The latter figures do not, of course, include any investment income, and the total therefore requires to be increased by about £1000 to take account of that element. In light of those two sets of figures, one for the last complete year before the divorce and the other for the year in which the divorce was granted, it seems to me to be reasonable to proceed on the basis that at the time of the divorce the defender's total income was of the order of £22,000 or £23,000.

At the time of the divorce the pursuer was not working. She ceased working in April 1984 on account of depression. She received her full salary for six month, then half pay for six months, but at the end of that period, when she remained unfit for work, her employment was terminated. By the date of the divorce, her only income (apart from the aliment from the defender mentioned in the Minute of Agreement) was an invalidity payment of about £100 per month. (It may be that she also had a small investment income, but no mention of that was made in the evidence.)

Expressing both parties' income in monthly terms, the position on divorce being pronounced was that the pursuer had a total of about £575 per month (periodical allowance of £110 per week, say £475 per month, plus invalidity payments of £100 per month), while the defender was left with about £1425 per month (total income of about £23,000 per annum, say £1900 per month, less periodical allowance of £475 per month).

The defender's income as at October 1998 is summarised in No. 41/1 of process. The figures set out in that document require some updating and correction in light of the evidence.

The pursuer avers that the defender's wife is a successful artist, and calls upon him to aver her financial circumstances. That call was not answered. Both at the original diet of proof in July 1999 and at the continued diet on 28 September 1999 the defender's wife was unable to attend as a witness because of ill-health. By the continued diet certain documentary material relating to her income had been made available, and was lodged by the pursuer (Nos. 49/4 to 49/8 of process). Mr McKenzie accepted that these documents were what they bore to be, and did not dispute the figures which appeared in them. The documents may be summarised as showing that the defender's wife's net profit /(loss) before tax has been declared to the Inland Revenue (or in respect of the last two periods shown in accounts prepared by her accountants) as follows:

Although the matter was not explored in any detail in evidence, it appears from the material produced to explain her inability to attend to give evidence that the defender's wife has recently undergone surgical and other treatment. That may well explain the fall in her more recent income, but the matter was not explored in evidence.

The defender's expenditure as at October 1998 is also set out in No. 41/1 of process. Those figures were only partially vouched, and I find it difficult on the evidence I heard to form a clear view of some of the items. The house which the defender and his wife occupy is jointly owned by them, and I understand that in consequence only one half share of certain items of expenditure has been entered in No. 41/1. That applies, as I understand the position, to item 2 (mortgage and indemnity premiums) and item 20 (council tax). I infer that it also applies to item 4 (food), but I am not clear whether it applies to item 3 (house repair and maintenance), item 12 (telephone), or item 14 (heat and light). I understood from the defender's evidence that he and his wife have no formal arrangement to regulate their respective contribution to household expenditure. She regards herself as financially independent, and aims to support herself entirely. She meets some items of household expenditure, and makes such contribution as she can afford to others met in the first instance by the defender. The defender said that he would not ask for a contribution which she could not afford. All of that is entirely understandable, but it does not make for precision in the analysis of the evidence of expenditure borne by the defender. The calculation made in No. 41/1 of process brings out a deficit of £4870, which would be reduced by some £700 by the adjustments I have made to the statement of income. The deficit is closely matched by item 18 - cash (general expenditure). Without that general item, the defender's statement of his income and expenditure would be roughly in balance.

The pursuer's present income (other than periodical allowance) is set out (as at June 1999) in No. 45/1 of process. Converted into annual amounts her income may be summarised as follows:

The pursuer is presently 66 years of age and suffers from osteoporosis. She has not been in employment since 1984. There was no suggestion that she had any means available to her of increasing her income by earnings.

No. 45/1 of process also contains a statement of the pursuer's expenditure. It is unnecessary to set it out in detail. The total brought out is just under £400 per month, or £4800 per annum. The items included are mortgage (including building insurance), household contents insurance, council tax, alarm maintenance, electricity, gas, telephone, £35 per month towards a savings plan, rental of the key to communal gardens, television licence and income tax. It is to be noted that the figures include nothing for food, clothing or household maintenance, nor anything for holidays, entertainment or anything of that sort. In her evidence the pursuer estimated that until July 1998 (when the defender temporarily stopped paying periodical allowance) she spent about £600 per month (£7200 per annum) on food, clothing, repairs, entertainment and veterinary bills. Adding that estimate to the figure brought out in No. 45/1, the pursuer's total expenditure may thus be estimated at about £12,000 per annum. If a "general expenditure" item analogous to item 18 in No. 41/1 of process were brought into account, the pursuer would, like the defender, have an excess of expenditure over income.

Mr McKenzie submitted that since the date of the divorce the pursuer's income had approximately doubled (in fact, as I have found, it has increased from £6900 to £12,460), whereas the defender's had only increased from £22,000 to £25,000. When regard was had to movement of the retail price index in the period (the relevant increase being by a factor of 1.45) the pursuer could be seen to be better off in real terms, whereas the defender was worse off in real terms. He identified a number of factors to which he submitted I should have regard. They were:

1. the fact that the defender has been paying periodical allowance (and before that aliment) at £110 (or for a time £115) per week since 1984;
2. the fact that the defender has remarried, and has an obligation of support towards his wife, as well as his obligation to pay periodical allowance to the pursuer; there was, Mr McKenzie submitted, a point at which the obligation to the former wife must come to an end; the evidence was that the defender did in some measure support his wife;
3. the fact that both parties are now retired;
4. the defender's evidence about his continuing expenditure on renovation and extension of the house he shares with his wife;
5. the fact that, notwithstanding his adoption of the trading name Arclab with a view to the possibility of undertaking architectural projects if the opportunity presented, he had not so far undertaken any such work;
6. the fact that the pursuer appeared to have a surplus of income over expenditure, which Mr McKenzie suggested was about £600 per month; the loss of periodical allowance would not subject her to grave financial hardship; and
7. the fact that the defender's expenditure exceeded his income, and that he was funding the shortfall from capital.

In light of these considerations, Mr McKenzie submitted that the order for payment of periodical allowance should be varied to nil. Alternatively, he submitted that the amount of periodical allowance should be reduced to £150 per month, and should be payable only for a further period of fifteen months.

Mr Pieri for the pursuer submitted that although there had been changes of circumstances, those changes did not justify terminating the order for periodical allowance, nor did they justify the reduction of the amount or the imposition of a time limit on the duration of the order. The parties had been married for 27 years. At the time of the separation the pursuer had been ill with depression, and unable to continue earning her living. She had not worked since, and was now 66 years old and suffered from osteoporosis. The defender on the other hand had pursued a successful academic career until his retirement. This was therefore a case of a pursuer who was particularly dependent on continuing periodical allowance. She lived frugally, and had made no attempt to maximise her claims on the defender by seeking upward variation when his income increased substantially in the years before he retired. The periodical allowance presently payable represented less than one quarter of the defender's income, and was therefore well within the range of awards formerly made under the 1976 Act. Although the defender has remarried, the documents produced to vouch his wife's income show that she has a significant income and is able to make a material contribution to her own support. It would be speculation, in the absence of evidence, to conclude that her illness will result in a change in that situation. Moreover, the defender was not as badly off as he claimed. His statement of income and expenditure contained a large allowance (£4500) for "general expenditure" despite the comprehensive nature of the list of other items of expenditure. In the last year he had, on his own evidence, spent £20,000 on renovation and extension of his house, part of a total of £45,000 spent in that way over a longer period. He had recently bought a new car, spending £15,000 on a series 3 BMW to replace a more modest Renault 5. He had been abroad on holiday twice in the last year (leaving out of account a trip to Paris for a memorial service). He had invested £19,500 in premium bonds, and still held other investments. He had set aside £20,000 in the hands of his accountants as provision for the expenses of this process. The position of the pursuer was in sharp contrast. She lived very modestly. She had had only one holiday in the period since the divorce. She could not afford to run a car. Despite that the margin between her income and her expenditure was narrow, as was illustrated by her evidence that when the defender stopped paying periodical allowance for a period in 1998 she incurred an overdraft of £1600, which she repaid by realising the bulk of her remaining shares. Her evidence was that if periodical allowance were varied, she would have to sell her present house, a flat in Nelson Street, Edinburgh. In those circumstances no variation was justified. This was not an appropriate case in which to set a limit to the duration of the order. Since there was no prospect of her obtaining employment, to talk of her "adjusting" to a lower payment over a period of months, as proposed by Mr McKenzie in his alternative submission, meant no more than that she would have that period in which to budget for reduced expenditure, but there was little if any room for such reduction.

In my view it would not be appropriate to bring the pursuer's periodical allowance to an end, either immediately or after a period of fifteen months. As I have already indicated, I have no hesitation in accepting that there have been changes in circumstances since the date on which the periodical allowance was originally awarded which open the way to variation, but in determining whether the award should be varied in the way sought by the defender I must have regard to the respective means of the parties and to the whole circumstances of the case. That means that, while a comparison of the parties' incomes in 1989 with their present incomes is part of the material to which I must have regard, there are broader considerations, relating both to other aspects of the parties' respective means and to other circumstances which also have to be taken into account. In other words, the proper result cannot be reached simply by doing some proportion sums.

So far as income is concerned, the pursuer's position has improved since the date of the original award, both in absolute and in real terms. That is because (presumably since she reached the age of 60) she has had the benefit of her pensions, instead of the invalidity payments she received until then. Her income, inclusive of periodical allowance, has risen from £6900 per annum to £12,460 per annum. The defender's income too is now higher in absolute terms than it was in 1989, but it is lower in real terms. The increase is from about £23,000 to £24,742.

The other major change of circumstances is that the defender has re-married. While that is a change of circumstance, by itself the fact of re-marriage does not necessarily support a reduction in the periodical allowance payable by the party who has re-married. It is not difficult to envisage circumstances in which the means of the second wife were such that her husband's legal obligation of support towards her did not in fact bear to any appreciable extent on his resources. The present case is perhaps not at that extreme. The evidence is, however, that the defender's wife, over most of the period in respect of which evidence was available, was following her own profession as an artist, and was at least making a substantial contribution towards her own support, if not wholly supporting herself. It was the defender's own evidence that that was her aim. The state of the evidence about the defender's wife's ability to continue to support herself was not satisfactory. It was drawn to my attention that she has recently suffered serious ill-health, but that was done only in the context of her unfitness to attend as a witness, and I heard no evidence as to the prognosis in respect of her condition, or as to the impact it is likely to have for the future on the extent to which the defender will in fact provide financial support for her. I am of opinion that, in the absence of such evidence, Mr Pieri was right in his submission that I should not speculate on the point. It was for the defender to make clear in evidence the relevance of his re-marriage to the question of whether the award of periodical allowance in favour of the pursuer should be varied. If there had been evidence that the probability was that his wife would recover from her illness, but would not be able to resume work as an artist, and would thus be dependent on him for financial support, that would clearly have been an important consideration. I do not, however, consider that there is evidence before me which enables me to reach that conclusion.

I accept from the evidence that, with their present respective incomes, both parties are close to spending their entire income as it arises. As I have indicated, the view I take on the evidence is that the defender's present income is £24,742 per annum (with the unquantifiable possibility of a little more from the sale of the occasional painting). I accept Mr McKenzie's submission that I should not regard the Arclab project as a current source of income. Although the defender's list of expenditure in No. 41/1 of process was not fully vouched, I do not reject any of the identified items of expenditure. In particular, I accept that it is not unreasonable for the defender to continue to pay professional subscriptions at the practising rate, despite his retirement. There are, however, certain aspects of the list of expenditure which I note, including the expenditure on running a car, on holidays, on leisure, on magazines/papers/books, and on "Professional Architectural and Fine Art". There is too the unexplained allocation of £4500 to "cash (general expenditure)". The impression with which I am left is that the defender could to some extent cut back his expenditure without undue hardship. I am not persuaded that he needs to spend more than he receives in income. The pursuer's list of expenditure in No. 45/1 of process concentrates on only some areas of expenditure, omitting such obvious necessaries as food, clothing and household maintenance. I accept the pursuer's oral evidence that she requires to spend about £600 per month over and above the £400 vouched in No. 45/1. She thus has expenditure of £1000 out of monthly income of £1038. Mr McKenzie's submission that she had a monthly surplus of some £600 is not in my opinion in accordance with the evidence. I formed the view that the pursuer budgeted her expenditure carefully to ensure that it did not exceed her income. I accept that she cannot afford to run a car, or go on holiday or spend money on entertainment more than very occasionally. I am of opinion that there is very little room for the pursuer to reduce her expenditure.

It is also, in my view, relevant to look at broader aspects of the parties' means. The pursuer's only real capital is in her flat in Nelson Street. It was purchased with the bulk of her share of the proceeds of sale of the matrimonial home and a small loan. I accept the pursuer's evidence that if her periodical allowance were reduced to nil, she would have to sell the flat. Her evidence did not expressly address how much of a reduction, if any, she felt she could accommodate without being forced into selling the flat, but the evidence about the level of her expenditure and her frugal style of life suggests that any material reduction might well have that effect. She has only a few shares left, having sold some to repay the overdraft which she incurred when the defender for a time stopped paying periodical allowance. The defender's capital position was not explored in detail in evidence, but he and his wife own the house in which they live. There will, according to the defender's evidence, be a shortfall of £20,000 when their endowment mortgage comes to an end in 2004. He has, however, been able to spend £45,000 in recent years on renovation and extension of the house. He has recently spent £15,000 on a larger car. He has £19,500 invested in premium bonds. He has other investments, the precise value of which was not identified. He has £20,000 set aside to cover the expenses of this application. The defender's capital position seems to me, in short, to be substantially stronger than the pursuer's.

While the modern view of periodical allowance, strongly reinforced by the terms of the 1985 Act, is that it should normally be a short-term provision designed to afford the recipient an opportunity to adapt to economic independence from the former spouse, the present case is not in my view one in which the award made in the pursuer's favour can fairly be regarded in that way. The parties were married for 27 years. At the time of the separation, the pursuer was ill, and unable to support herself. She was therefore at that time dependent on support from the defender. She is now 66, and suffers from osteoporosis, and I have no hesitation in holding that there is no reasonable prospect that she will be able to achieve any supplement to her income by working. Notwithstanding the fact that her own income has increased by reason of her pensions replacing her invalidity payments, she remains dependent on her periodical allowance. To remove it would force her to sell her home. To set a limit to the period during which the periodical allowance will continue, as suggested in Mr McKenzie's alternative submission, would simply postpone the evil day. I do not consider that there is anything that the pursuer could do in the proposed period of fifteen months to adapt to the loss of the periodical allowance in a way which would avoid the need to sell the flat. I therefore regard the termination of the periodical allowance, immediately or at a future date, as a course which I would order only if there was clear evidence that the means of the defender made that necessary or appropriate. Having reviewed the evidence of the parties' means and all the other circumstances of the case, I am not persuaded that such termination, immediate or postponed, would be an appropriate exercise of my discretion.

It remains for consideration whether the amount of the periodical allowance should be reduced. It is unnecessary to rehearse the views which I have reached on the various relevant circumstances, since I have already discussed them fully. Although I regard the matter as a fairly narrow one, the conclusion that I have reached is that in all the circumstances the award of periodical allowance in the pursuer's favour should continue at the rate of £110 per week.

I shall therefore repel the second plea-in-law stated in the defender's Minute, and refuse the crave of the Minute.